IR35 can, at times, seem confusing and ever-changing. At it’s core however, the legislation is focused on one comparison – is a service-provider (or contractor) acting and being treated in much the same way as an employee. By keeping this in the forefront of our minds, it helps bring some clarity and guide us through the mechanisms HMRC have in place to make this determination.
What Is IR35?
IR35 is the more common name for ‘The Intermediaries Legislation’ or ‘Off-Payroll Legislation’. In force since 2000 for contractors, it was created to take away the tax advantages of individuals providing services through a limited company who are not strictly in business, or as HMRC have put it, are ‘disguised employees’. People who are providing a service to a client, but their working practices are the same as those of a traditional employee.
In 2017, it became the responsibility of the Public Sector to work out whether their workers were caught by IR35. This means any workers ‘inside’ IR35 would have to have PAYE tax and NICs deducted at source.
With the legislation now planned to be extended to the Private Sector on 06 April 2021, it would seem HRMC are now focused on the end-client taking ‘reasonable care’ when approaching the new changes required. Businesses found to be engaging contractors incorrectly will become liable for any unpaid tax, where previously the liability rested with the contractor.
As an End-Client, what steps to I need to take?
IR35 will affect any business in the UK who engage contractors through an Ltd Company and who meet the business size criteria set out by HMRC. To begin with, as there is less than 3 months to go, there are some questions you need to ask:
Do you know the details of all of the contractors you engage with?
How are you managing and documenting IR35?
How will you make the IR35 determinations?
How will your business manage high workloads where you could previously engage with limited company contractors?
Have you tested and validated your supply chain?
Once you have the answers to these, there is a baseline to begin with. Until you know who may be affected you won’t be able to make any contingency plans for the skills you need for business as usual.
How Resourcing Redesigned can help
We have helped many clients understand the impact and changes required for IR35; and implemented IR35 compliance changes for clients ranging from 70 employees to full process review and changes for large multinational clients. We help businesses like yours test and validate the changes you have already made, finding previously unidentified potential weaknesses.
IR35 Workshop:
An exploratory session on the impact IR35 on your business, our approach to the reform and how we can support you through the process.
Consultancy Service
Provides specific advice when needed
Specialist and objective knowledge to validate and test processes
IR35 Assessment
Appraisal of your contractors and therefore your exposure to IR35.
Review your supply chain
Identifying any missed steps in your processes
Provide you with a detailed assessment of the potential impact of IR35 on your business and working Practices.
This includes a step by step plan on how to minimise risk at all levels of your business.
Manager and Contractor Workshops
Exploring individual contractors in their teams
How managers can future proof these roles.
Outline your determination (and the process) to contractors and agencies
Providing answers to specific questions relating to your business
Sai has over 18 years of resourcing and HR experience, together with project management, lean and change management accreditations. Utilising his experience, you can trust him to find the solutions to your unique challenges. To book your free consultation now and see how he can assist your business, call 0208 1544532 or email info@hubblesolutions.co.uk